Economics/Business GCSE - Unit 5 - Introduction to Economic understanding - Keywords

Keywords for  Introduction to Economic understanding (unit 5) for economics GCSE.

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Topic 5.1
Scarcity: Resources are limited in supply, e.g. raw materials, time
Trade-off: Where the selection of one choice results in the loss of another.
Opportunity Cost: The loss of the next most desired alternative when choosing a
particular course of action.
Price: The amount of money required to purchase a good or service.
Revenue: The value of sales o a time period, calculated by Price x(times) Quantity sold.
Demand: The quantity of a good or service a consumer would like to buy at a given price
in a time period.
Price insensitivity: Where changing the price of a product by a certain amount leads to a
smaller change in demand.
Necessity: A good or service that a consumer views as essential.
Substitute: A good or service which is a possible alternative to another good or service.
Price sensitivity: Where changing the price by a certain amount results in a bigger change
in demand.
Stakeholder: Groups which are interested in the performance of a business.
Shareholders: The owners of a limited company. They buy shares which represent part
ownership of a company.
Competition Commission: The body which investigates cases where firms merge or are
taken over to decide whether such activity is in the public interest. It has the power to
prevent mergers or take-overs where these are seen to reduce the level of competition.
Dividends: The payments made to shareholders from the profits of a company.
Third party: a group or an individual that is not directly involved in a decision or action.
Externalities: The effects of economic decision on individuals and groups outside who
are not directly involved in the decision.
Negative externalities: Those costs arising from business activity which are paid by
people or organisations outside the firm.

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Positive externalities: Those benefits arising from business activity which are
experienced by people outside the firm. The firm receives no payment for the benefits
Profits: the rewards for risk-taking. Profit is the difference between the amount of
revenue earned b a firm and the total costs of producing the goods ad services the
business sells.
Market share: The quantity sold by a business as a percentage of total sales in a market.…read more

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Internal shock: An unanticipated change in demand or inflation caused by factors within
the country.
Tax revenue: Money received by the government from people and businesses paying
their taxes.
Exports: Goods and services which are sold to other countries and which lead to
payments to the UK.
Imports: Goods and services brought from other countries which leads to money going
out of the UK.
Exchange rate: The value of one currency in terms of another.…read more

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Economies of scale: The factors which cause the average cost of producing something
to fall as output rises.
Bulk-buying (commercial) economies: Occur when businesses can gain discounts on
large orders from suppliers.
Technical Economies of scale: Reductions in average costs of production due to the use
of more advanced machinery.
Market Power: A measure of the influence of a business over consumers and suppliers.
Diseconomies of scale: The factors which cause average costs of production to increase
as output increases.…read more

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Investment: Spending on equipment and plant that helps contribute to production.
Human capital investment: Spending on training and education, which allows workers to
be able to produce more output in the future.
Physical capital investment: Spending on new assets such as factories or machinery,
which allows a firm to produce more output in the future.
Grants: Sums of money provided by the Government to encourage a particular project
or activity.…read more

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Corporate social responsibility: A measure of the impact that a business has on society
and the environment as a result of its operations.
Greenwash: Where a business tried to give the impression that it is environmentally
friendly when its claims may not be entirely true or justified.
Ethical responsibility: Where a business takes a moral standpoint and ensures that its
behaviour does not impact stakeholder groups in a negative way; it tries to do the `right
thing'.…read more

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Absolute poverty: Where a person cannot afford the basics of life such as food, shelter
and clothes.
Universal Benefits: Payments made by the government to people that are paid
regardless of a person's level of income.
Means-tested Benefits: Payments made by the government to people, that are
determined by the amount of income or savings a person has.
Relative poverty: Where a person has a standard of living well below the average for that
country.…read more

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Debt relief: The reduction or cancellation of debt that LEDCs owe to either the World
Bank or developed nations.
Charities: Organisations that aim to produce a surplus of income over expenses to
promote a good cause.
Non-Government Organisations: Independent non-profit organisations that aim to
achieve a particular objective, e.g. debt cancellation.
World Trade Organisation: An organisation that aims to promote international free trade.
Fairtrade: An NGO which aims to improve living standards in LEDCs by paying higher
prices for agricultural produce.…read more


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